The global smart lighting market is set to take off as more efficient LED smart lighting is adopted across a wider range of commercial and urban applications, according to an October 2023 report by Technavio.

The market size is projected to increase by $17.2 billion from 2023 to 2027, accelerating at a compound annual growth rate of 16.88%, according to the market research company.

“Smart lighting optimizes electricity usage by controlling lighting, heating and cooling, including remote appliance management,” according to the report. “It curtails electricity costs by judiciously scheduling light activation.”

Popular features include automatic room entry activation and color adjustments users can customize. Sensors automatically adapt to movements by people and objects such as forklifts and other equipment, ensuring appropriate illumination.

“The smart lighting market is experiencing substantial growth, driven by advancements in LED technology, compact fluorescent, and halogen lighting technologies,” Technavio wrote. “Integration with IoT devices, such as smartphones and tablets, through platforms like SmartThings, has revolutionized lighting in office spaces and industrial settings, contributing to increased industrial output growth.”

LEDs—“the forefront of smart home technology”—are shaping the market's landscape, according to the report. Government regulations, focusing on lumens per watt and phasing out traditional bulbs like incandescent and CFL, propel the adoption of energy-efficient LED lighting.

Compliance with directives like the European Union’s Restriction of Hazardous Substances and the integration of A.I.-empowered products, featuring voice recognition and remote operation, further drive smart home automation.

“Smart lighting is not limited to residential applications—it finds extensive use in healthcare and commercial spaces, enhancing workspaces and contributing to energy efficiency,” Technavio wrote. “As the market continues to evolve, the intersection of lighting technology with IoT and A.I. promises innovative solutions for efficient and intelligent illumination systems.”

Advancements in LED smart lighting should dramatically boost adoption, according to the report.

“LED adoption promises energy savings and integration with smart and IoT technologies,” Technavio wrote. “Manufacturers frequently upgrade LED technologies to align with IoT advancements. Rising global interest in smart lighting fosters vendor partnerships and a global ecosystem.”

The commercial segment will account for a major share of the market's growth by 2027, due in great part to the implementation of strict government rules on energy use and carbon emissions. Smart lighting systems will enable commercial establishments to reduce energy consumption and integrate their ecosystem with IoT.

“To set up a network of connected bulbs that can be controlled with one system, businesses have taken the initiative to install intelligent lighting systems,” Technavio wrote. “The data generated by the system can provide insights to optimize service delivery and operations, which will enable the efficient utilization of energy and reduce costs.